The industry may be vilified but there are creative groups with long perspectives.
Forty-odd years ago, about to graduate from university, I received my first job offer, from BP. I accepted instantly. Oil was the industry of the moment. North Sea oil and gas was being developed, offering the UK a degree of freedom from the power of Opec and the risk of embargoes. The combination of economics and politics and the idea of working for a great company operating on a world stage was irresistible.
Now I’m often asked by students or their parents if they should consider a job in the sector. Would I make the same decision now?
Things have certainly changed. The oil and gas industry is under attack on many sides. Vilified by environmentalists for its contribution to the continuing growth in emissions and global warming, it faces an increasing number of court challenges from those seeking to prove the liability of individual companies for the damage done by climate change.
At a different level of the debate the industry is seen by some investors as vulnerable to the loss of market share and profitability as renewables, helped on by falling costs and public policy support, take up an ever larger volume of demand.
So given this perception of the industry as one whose best days are past, what would advise someone starting out? I would say yes, work in the sector — but choose your employer with care.
Many large companies in many sectors are unpopular and face fundamental competitive challenges. Think of Amazon or Volkswagen. But few — the tobacco industry is an obvious exception — attract the visceral hostility that confronts the oil and gas sector or the epithet of “dinosaurs”, relics of the past destined to extinction. Who would want to work for a dirty dinosaur?
That is the fashionable view but it is too superficial. If you are offered a job in the industry, you should be asking what future the company envisages for itself. One of the greatest pleasures of working in the energy business is the length of the horizon. The companies — especially the oil majors — think and plan on the basis of a 30- to 40-year strategy. That, after all, has been the lifespan of all major provinces from the North Sea to Alaska.
Given this refreshingly long perspective, all the companies should now have strategies that take them to the middle of the century. Of course the details will evolve continuously, but it is the underlying strategic approach that matters. Such thinking is what distinguishes creative companies from dinosaurs trapped in their past successes. It has allowed the majors to adapt and remain relevant and successful through more than a century of war, political upheaval and dramatic economic change.
The problem is that the companies are finding it hard to articulate any such long-term strategy. Very few deny that change and a shift to a lower carbon economy is coming, even if there are legitimate differences about the timing and pace of the shift. But there is little clarity on how they see themselves operating in the coming new world.
There is, of course, no single strategic answer to the challenge of the energy transition. It would be perfectly legitimate for company A to decide that it will stick to what it does well for as long as that is possible and profitable; having harvested its resources it will then return residual value to the shareholder. Company B might take a different approach, waiting to shift the balance of their activity until the timing is clearer and the choices more obvious. The first of these alternatives will be more attractive to investors than the second. Neither are likely to be terribly enticing to an aspiring new graduate.
The third approach is more complex but much more interesting. That is to ride both horses — creating an organisational structure which creates two entities with very different characteristics. The strategic objective should be to hold a leadership position in both elements while over time the balance will naturally shift from hydrocarbons to low carbon.
Riding two horses at once is a great intellectual and organisational challenge. The two entities will require different skills and market knowledge. For investors they will be different animals — requiring a very careful alignment of expectations, perhaps through a twin stock market listing, and distinct processes of capital allocation. But the quality of any serious job depends on there being tough challenges. There are no great careers to be made in doing work that is mechanical and filled with drudgery.
Navigating the energy transition matters not just for individual and companies but for society as a whole. It demands the entrepreneurial drive and global reach that is part of the DNA of the oil and gas majors. So to any youngster offered a job in a company prepared to think in this way I would say: you should be as thrilled as I was over 40 years ago. Personally, I would not hesitate to make the same choice again. Oh, to be 21.
This article was first published on ft.com on 1 April.